Growing apps in a recession: 4 keys to building cockroach apps via Tynker CGO Lomit Patel
Finding it tough growing apps in a recession? No wonder: a whole generation of mobile marketers have cut their teeth on app growth in the grand old times of (nearly) free money from venture capitalists. While huge budgets (and reliable deterministic measurement on both major platforms) are really, really nice, those times are over.
So how do you grow when growth is hard?
You become a cockroach app.
Growing apps in a recession requires building cockroach apps that can survive the nuclear (economic) apocalypse when nothing else does. How? By focusing on the fundamentals, says Tynker chief growth officer Lomit Patel.
“If you look at the past 5, 6, 7 years, there was such an over-index emphasis on growth at all costs, right?” Patel, who is the former VP for growth at IMVU and led direct marketing at Roku, told me recently in a Growth Masterminds episode. “It was really cheap to get money at that time, especially in startups. So it was really about just buying your way to growing as quickly as possible.”
That’s all changing in a world in which Google has laid off 12,000 people, Microsoft 10,000, Amazon 18,000, and venture capital investment is down 53% year over year.
What are the critical keys to growth now?
Balancing acquisition with engagement, monetization, and retention, Patel says.
Growing apps in a recession: return to the fundamentals of growth
Balance is the new acquisition.
“Now it’s really coming down to the fundamentals of not buying all costs, but really getting the balance around how you acquire users and how you retain, engage, and monetize … and getting the full balance around the entire user funnel,” Patel says. “A heavy emphasis now is really coming down to retention … how do you retain your best users?”
That’s tough.
As we all know, we have maybe 50 or 100 apps. Some have literally hundreds. But the number we use on any given day is probably less than the number of fingers and toes we own — and maybe less than just our fingers alone. That means every single app is in a zero-sum, red ocean, high-stakes competition with every other app for a diminishing and perishable commodity: human attention.
Good luck, marketers.
In addition, there’s added pressure on getting user acquisition right — thanks to lower budgets — at exactly the same time as App Tracking Transparency is taking data away on iOS (and Privacy Sandbox soon will on Android). Which means that although you now need to know the projected lifetime value (LTV) of your new users with better certainty than ever before, you have less data to actually do so.
4 keys to growing apps in a recession (with minimal budget)
Patel sees 4 necessary responses to the challenge of growing with minimal budgets:
- Predicting value more effectively
- Diversifying revenue more aggressively
- Growing organically, not just via paid user acquisition
- Boosting engagement and retention of users you already have
The first key is critical, especially under SKAN 3 but also under SKAN 4: getting an early understanding of new user cohort value.
“One of the things that we were able to do at IMVU was to try and identify early signals, and look at what were those early signals that you could depend on to try and build up a productive lifetime value model,” Patel says. “And then — whatever that model was — pump back a different signal to the mobile measurement partners.”
“So instead of relying on registrations and revenue, you come up with your own formula of a signal and optimize to that … and that’s even more important right now.”
This, of course, is a core part of Singular’s SKAN Advanced Analytics: modeling for missing data to get the best possible — and earliest possible — optimization signals. Without modeling on iOS, you have too little data to accurately adjust course.
The second key to growing apps in a recession is nice to have at any point, but is critical during uncertain economic periods: revenue diversification. As we saw in a recent Singular webinar, 90% of non-gaming in-app revenue is now subscriptions: great if you can get it and more stable than individual purchases, but potentially iffy when people might be looking to save money. Building revenue from a combination of purchases and subscriptions and advertising diversifies your risk from any one of them.
The third is organic growth: always appealing because it seems “free.” (Which, of course, it is not: you typically need huge investments in having a great product to grow both organically and sustainably.)
Think product-led growth: particularly important when paid acquisition is harder than ever. A cool new idea could go viral, but only a solid product and a great user experience will successfully capitalize on that buzz to form the foundation for long-term revenue growth.
The fourth key to growing apps in a recession is boosting engagement, which will increase both retention and monetization. One thing that can help: AI-driven personalization.
“Increasing engagement and retention, I would say, really comes down to increasing your ability to leverage AI and automation for personalization, to increase the way you can personalize the experiences within your app,” Patel says.
Verticals that grow in recessions
Any app or any business can grow under tough circumstances, of course. But it helps to be in verticals that are relatively recession-proof.
Entertainment is one, Patel says: people still need to have fun and enjoy themselves, although they may look for less expensive ways to do so. Another is gaming, for much the same reason. If people cut back on going out or traveling, gaming is still a relatively inexpensive way to spend time, have fun, and experience the much-needed thrill of winning.
“People will still need to figure out how to keep their mind active and not go brain dead and depressed with whatever’s going around,” Patel says.
Another recession-proof vertical?
Education.
We’re not going to stop educating our kids during an economic downturn, and we’re going to take advantage of opportunities to upskill both ourselves and them in order to take advantage of whatever opportunities remain available.
Still, the biggest challenge remains data
The biggest challenge to growing apps in a recession, however, doesn’t have much to do with the actual recession. It remains data loss due to SKAdNetwork. That’s nothing new, and it’s something that is going to improve with SKAN 4, but it remains the core issue for many marketers on iOS.
And that’s where brand — yes, brand — can help performance marketers.
“At Tinker we call it a first-time user experience … and that first-time user experience actually starts even before somebody gets to your app,” Patel says. “What’s the experience in the App Store or first ad … people tend to over-index on certain pieces rather than the entire journey.”
That first experience could be organic too, and increasingly is as apps invest in search engine optimization and influencer marketing. Which is fundamentally different than paid acquisition, because I feel in control of what I come across organically, versus feeling “marketed to” when I see an ad. An organic first experience, when positive, is a very powerful driver of behavior.
“So what I will say is, really focus on the entire journey to really set the right precedent,” Patel says. “Before someone even gets into your app — and once they get into your app — try to remove as much friction as possible.”
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